Global insight

‘Price-fix’ airlines snitched on rival carriers

AIRLINES which settled early in a US$1.2bn class-action price-fixing case brought by air cargo customers paid reduced settlements – and then systematically snitched on their rivals, Thelma Etim, editor of aircargoeye.com exclusively reveals.

The whistle-blowers coughed up “valuable co-operation to the plaintiffs in pursuing the case against the other defendants,” reveals Brent Landau, a partner at Hausfeld, the global law firm, which successfully handled the long-running lawsuit.

As part of the settlement agreements the airlines that settled early provided “important co-operation that helped us build the case against the others, and this is one reason why, as the case progressed, the percentage of sales represented by the various settlements increased over time.”

The earliest settlements were in the range of two per cent of sales and the final settlement (Air India) accounted for more than 10 per cent of alleged price-fixed sales, Landau reveals.

Agreements to settle from the 28 defendant airlines totalled more than US$1.23bn.

Some of the funds have already been distributed, whilst the remaining settlements, when approved by the court, will be distributed some time over the next year, says Landau.

All members of the class action – believed to consist mostly of freight forwarders – have now received notice of the settlement figures and will have various opportunities to submit claim forms for approval by the court. How much each receives will be based on a number of factors.

“Broadly, it is in proportion to the volume of air cargo shipping services purchased by the class member from the defendants over the period of time affected by the cartel,” he explains.

The multi-district Air Cargo Shipping Services Antitrust Litigation held in the US District Court for the Eastern District of New York played out over 10 years.

“The defendants [initially] argued that the plaintiffs did not have evidence of a single worldwide conspiracy and that the case should be analysed along individual regions, or routes – and that was one of the arguments that was rejected by the court,” Landau volunteers.

“Also, some of the defendants argued that there was insufficient evidence as to their participation in the overall conspiracy [but] the court rejected those arguments as well and found that [indeed] there was sufficient evidence,” he continues.

Hausfeld’s lawyers spent more than 35,000 hours working on the case, which generated more than 18 million pages of documents, some 100 depositions, and numerous court appearances.

The defendants also argued that the plaintiffs did not have a methodology to assess impact and damage across the entire class of purchasers of air cargo services. “But the court agreed with us that we did have a workable methodology,” Landau adds.